Jan. 26, 2016


Erlan Ospanov

Kazakhstan

Erlan Ospanov

CEO, Verny Capital

"Because our portfolio is quite diversified, we were able to absorb the impact of the tenge devaluation in August 2015."

BIO

Prior to the foundation of Verny Capital, Erlan Ospanov served as Deputy Director General of the ATF Group Holding Company in Kazakhstan, which managed the non-financial assets of ATF Group and was responsible for corporate finance and investment activities related to non-financial assets. Before joining ATF, Yerlan Ospanov worked for several years at Narodnyi Bank, where he became Deputy Director of the bank’s treasury operations. In the late 1990s, for three years, he also managed GRK Balkhas’s gold trading, processing and refining and short-term pre-export financing operations. He graduated from Moscow State Technical University’s department of Robotics. He also received a degree in Finance and Credit from KIMEP University and an MBA from the University of International Business, Almaty.

What are your recent achievements as a company?

Our assets are growing with our standard growth rate. We are present in different industries—telecoms, gold mining, real estate, banking—and due to this diversification, we are stable. That is our management policy. Since divesting some of our mineral resource assets, we have acquired new exploration fields, particularly gold fields. Currently, we do exploration and we expect to increase these reserves. Nonetheless, in the gold fields we operate without a partner so the strategy is based on our existing experience. We also started to work with new opportunities to build a pipeline of projects, and we are looking for new opportunities in the high value-added segment here. For example, we are working on several new investment opportunities, particularly within the wheat and grain processing industry. This is not agricultural per se, but the processing of agricultural goods, otherwise known as agribusiness.

What is the international outlook, and what kind of partners are you looking for?

Historically, we work with strategic partners that have experience and expertise in a particular industry, such as Ritz Carlton, for example, in the hospitality sector. With our new investment opportunities, we are looking for a professional partner. In terms of sectors, we are currently focusing on production industries. We are not going to do this by ourselves, meaning we are working to attract a professional partner with experience in this segment. In terms of identifying new partners, the obvious step is to determine which companies are leaders in their field. However, the reality is that those giants are not flexible and are quite often conservative so, being a young, flexible company, we are also looking for young, flexible partners. As a first step, we are looking at large global conglomerates, but the second step is that we are also studying other companies to be potential partners. On that level, we see more opportunities.

How are the current market conditions affecting the country's diversification program?

It is clear that Kazakhstan's economy has suffered because of the low oil and commodity prices. However, the tenge free-float policy, which was recently introduced, helps companies that rely on exports. This move supports local productions and the country's exports across all non-oil sectors. While the tenge was devalued, the beneficial tax regime, which was declared by the president and the government, was not changed. All those benefits and conditions that were announced for foreign investors are still in place and thriving. We are going to continue to use those benefits to build our new plant, for example. So in fact, the current market conditions, prompted by these government initiatives, favor the country's goal to become a sustainable, diversified economy.

What are your expectations for the company in 2016?

Our projections and expectations are strong. Because our portfolio is quite diversified, we were able to absorb the impact of the tenge devaluation in August 2015. Much of this had to do with our preparations and adaptability for all market scenarios. For example, we often stress test our portfolio in case of currency volatility or inflation influx. We didn't necessarily expect such a sudden devaluation, but we were ready nonetheless. The export companies in our portfolio, of course, are benefiting. Some companies have suffered, but cost cutting is the last step for us in any case. We are trying to convince our management to create some new products to develop such solutions that will increase the revenue, despite the devaluation. We want to motivate people despite the cost-cutting initiatives. For example, some of our companies, despite the uneasy world economic situation, have increased in size. They need to support their employees to bring in more revenues and work more effectively. In this sense, maintaining the loyalty of our staff is crucial in the given market conditions.

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